John Hall V. Mark Crawford
| Jurisdiction | Scotland |
| Judge | Lord Cameron of Lochbroom,Lord Marnoch,Lord Nimmo Smith |
| Date | 17 January 2002 |
| Docket Number | XA4/01 |
| Court | Court of Session |
| Published date | 17 January 2002 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Cameron of Lochbroom Lord Marnoch Lord Nimmo Smith | XA4/01 OPINION OF LORD CAMERON OF LOCHBROOM in APPEAL From the Sheriffdom of Lothian & Borders at Edinburgh in summary cause JOHN HALL Pursuer and Appellant; against MARK CRAWFORD Defender and Respondent: _______ |
Act: Davies; Balfour & Manson
Alt: Party
17 January 2002
[1]This appeal concerns a summary action for payment of the principal sum of £1063.83 which is claimed by the pursuer and appellant as due to him as part of his outlays and remuneration while acting as permanent trustee appointed in the sequestration of the defender and respondent.
[2]The circumstances giving rise to the claim, and to a related counter claim with which this appeal is not concerned, are fully set out in the sheriff's note of 4 April 2000 and in the case stated by the sheriff following his determination by interlocutor dated 4 April 2000 to grant decree for payment by the defender to the pursuer of the sum claimed. The defender appealed to the sheriff principal. On 26 September 2000 the sheriff principal, after hearing parties, allowed the appeal by answering certain questions in the stated case in the negative and finding it unnecessary to answer the other questions, and thereafter by recalling the interlocutor of 4 April 2000.
[3]I take what I consider to be the facts relevant to the appeal in large part from the sheriff principal's note appended to his interlocutor of 26 September 2000.
[4]On 8 July 1998 the defender was sequestrated under the Bankruptcy (Scotland) Act 1985 upon an application by a creditor, Portobello Printers Limited. The award of sequestration was not opposed by the defender. The sheriff who dealt with the matter appointed the Accountant in Bankruptcy as interim trustee. In exercise of his powers under section 1B(2) of the 1985 Act, the Accountant in Bankruptcy then appointed the pursuer, who carries on business as an insolvency practitioner, to perform his functions as interim trustee. In due course the creditors elected the pursuer as permanent trustee at a statutory meeting which took place on 31 July 1998. The sheriff thereafter confirmed the pursuer as permanent trustee by act and warrant dated 17 August 1998. This declared that the whole estate of the defender trading as Sulfer Quay at 16 June 1998 "is vested in and now belongs" to the pursuer for the benefit of the creditors of the defender trading as Sulfer Quay.
[5]In due course, and in terms of section 16 of the 1985 Act, the defender petitioned the Court of Session for recall of the award of sequestration. The pursuer chose not to enter that process. On 23 February 1999 the Lord Ordinary recalled the award. The terms of that interlocutor are set out in full in the sheriff principal's note but, so far as it is material, it reads as follows: "The Lord Ordinary having considered the Petition and proceedings, no answers having been lodged, recalls the sequestration of (the defender): Directs that payment of the outlays and remuneration of the interim trustee and permanent trustee as the same may be determined by the Accountant in Bankruptcy, shall be made out of the debtor's estate....". It is the effect of that direction, made under section 17(3)(a) of the 1985 Act, with which the present appeal is concerned.
[6]Following on recall of the award of sequestration, the pursuer prepared his final accounts. These were in due course audited by the Commissioners. These accounts bear to show that there was a sum of £1,063.83, which the sheriff principal terms "a shortfall", in respect of the fees due to the pursuer as permanent trustee. The pursuer then demanded payment of that sum from the defender. When payment was not forthcoming, the present action was raised.
[7]From the sheriff's note it appears that in August 1998 the defender deposited with the pursuer the sum of £15,000. This sum was thereafter held in a specific interest bearing trust account in the pursuer's name as permanent trustee. There followed correspondence between the parties. In the course of this correspondence it was accepted for the defender that the sum so deposited was not sufficient to discharge all liabilities together with statutory interest and the costs of the sequestration process. On 15 February 1999 the pursuer wrote to the solicitor acting for the defender acknowledging receipt of a copy letter from the Halifax Building Society confirming that the Halifax had irrevocable instructions to forward £6000 to the pursuer once recall had been granted. In that letter the pursuer confirmed that in his view the defender as debtor had "now" satisfied the requirements of section 17(1)(a) of the 1985 Act. By this time the pursuer had produced to the defender an estimate in writing of the financial position as at 9 February 1999. This document set out that as at 29 January 1999 the pursuer held funds in trust amounting to £15,135.06. The estimate included, amongst other things, provision not only for the pursuer's fee to 15 December 1998, but also the interim trustee's outlays, as well as the pursuer's "unbilled costs to date" and the pursuer's fee "to close case (estimated)". There was also a stated sum for statutory interest "to 28 February 1999" on the creditors' claims, which claims amounted to £10,897.24. The estimated "shortfall" was given as "£6,387.78" to which was added, as a note, that the estimate included VAT of £776.23 "which should be recoverable".
[8]It is not in dispute that the sum of £6,000 was provided to the pursuer. While no information is given as to the exact date when the sum was paid into the hands of the pursuer, the correspondence clearly indicates that it was only to be paid after the recall of the sequestration had been awarded. Accordingly, at the date of recall of the sequestration the pursuer had available funds of £15,000 to which interest fell to be added and security in the form of the irrevocable authority given to the Halifax to pay over the sum of £6000 to the pursuer. The sheriff in the stated case refers to "the funds provided of £21,000". On the other hand, in his note the sheriff principal states that "at the time when the defender's petition for recall was before the Court of Session (the defender's) estate, vested in the pursuer as the permanent trustee, amounted to £21,000 to which there fell to be added a further sum of £219.65 as statutory interest". This statement, strictly speaking, is incorrect since it was only the deposited funds of £15,000 which were actually in the pursuer's hands prior to recall.
[9]It is not in dispute that upon recall of the award of sequestration the defender, as the debtor, and any other person affected by the sequestration was restored, so far as practicable, to the position he would have been in if sequestration had not been awarded (section 17(4)). Thus any funds which would have vested in the pursuer as permanent trustee but had not then been ingathered by him, would automatically be vested once more in the debtor. Furthermore, it appears from the correspondence that the sum of £6,000 was to be provided not by the defender but by his wife.
[10]The sum decerned for in this action is said to be part of the outlays and remuneration of the pursuer in his capacity as permanent trustee, to which outlays and remuneration reference is made in the Lord Ordinary's interlocutor. It is vouched by a document appended to the claim which bears to set out the "trustee's receipts and payments account for the whole period of the sequestration". The sheriff in the stated case observed that the pursuer could only succeed by demonstrating that the direction in the interlocutor of 23 February 1999 that payment of those outlays and remuneration shall be made out of the debtor's estate, is equivalent to a requirement on the defender to pay the outlays and remuneration. He decided that the pursuer had done so on the basis that the expression "the debtor's estate" in the Lord Ordinary's interlocutor meant "all the property owned by the defender". His decision is succinctly set out in a passage where he considers the meaning of that phrase. He began by stating that in his opinion it is not possible to interpret the phrase as meaning the estate in the hands of the trustee. Looking to the provisions of the 1985 Act, and in particular sections 31(1) and 33, he observed that with certain specific exceptions, the whole of a debtor's estate vests at the date of sequestration in the permanent trustee. He then dismissed the argument for the defender that what was meant by the phrase, as it appeared in the Lord Ordinary's interlocutor, was that it was such part of the defender's estate as was in the hands of the permanent trustee at the time. He did not consider that that was a possible interpretation of the phrase. He concluded by saying this:
"Accordingly, I hold that what is meant by that direction in the interlocutor of 23 February 1999 is that payment of the outlays and remuneration of the interim trustee and permanent trustee shall be made out of the defender's whole property. That appears to me to be another way of saying that the defender shall make it. I appreciate that this is a somewhat involved way of saying that the defender shall pay the whole outlays and remuneration. I am aware of the argument that it could have been simpler for the Court simply to say that. Nevertheless, I think that is what the direction means. It follows that I am against the argument of the defender that these outlays and remuneration can only be paid out of estate in the hands of the trustee at the time."
The sheriff went on to note that the present action was one for payment. He considered that it was probably correct that such an action was the appropriate way to recover the outlays and remuneration outstanding, since "the direction of the Lord Ordinary as to payment of the outlays and remuneration is not equivalent...
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